2. AGENDA
Brief History of British Airways
Terminal 5
The Crisis
Reason for the crisis
Analysis of the crisis
Steps taken by British Airways
Steps recommended
Lessons learnt
3. British Airways
Founded in 1924 as Imperial Airways.
In 1974 BOAC & BEA merged together to form British
Airways plc.
Largest airline in the UK based on fleet size (>239,
excluding subsidiaries).
Was the largest UK airline by passenger numbers from
its creation in 1974 until 2008.
Main hubs-London Heathrow Airport & London
Gatwick Airport.
Privatized in 1987.
4. Continued…
Destinations- ~37o in more than 75 countries.
Revenue approx. £8 bn (2010).
Will become third largest airline after merging with
Iberia airlines.
CEO- Willie Walsh.
5. TERMINAL- 5
Heathrow airport terminal five was built exclusively for BA.
Terminal 5 is one of the most technologically advanced
airport terminals in the world.
Cost of the project -€4.3 bn, time duration – 19 yrs from
conception to completion.
Capacity- 35 million passengers a year.
Inaugurated 0n march-14, 2008, by Queen Elizabeth-II.
Opened to passengers on march-27,2008.
Introduced most advanced three-stage luggage processing
system.
Opening of T5 is one of the biggest operational disaster in
recent business history.
6. The Crisis
34 flights were cancelled & baggage check-in was
suspended on the very first day of operation
More than 500 flights were cancelled & about 42,000
bags failed to travel with their owners over the period
of next ten days.
More than 73 staff member went on strike after first
day of operation.
T5's computer system didn't recognize staff ID hence
had to reconcile bags manually, causing flight delays.
Out of 275 lifts, 28 were not working .
7. Continued…
Passengers had to wait for about 3-4 hrs for their bags.
Very few staff members to serve large number of
impatient passengers ( 4 staff members for about 1000
passengers).
Poor customer services.
Complete contradiction with the positioning of the
brand (reassurance & reliability.)
8. Analysis of the crisis
Accusation – true.
Nature of crisis – severe.
Customer association of the brand- very high ( BA is
national airline).
9. Reason for crisis
Poor training of staffs.
Logistics & planning.
Lack of pretesting.
PR Fiasco.
Lack of proper communication ( internal & b/w BA &
BAA).
No contingency plan & lack of anticipation of any
possible crisis.
10. Outcomes
BA's shares fell 3% on T5 opening day, wiping £90m off
BA's value.
BA lost £25 mn due to this crisis.
According to a research agency the brand value of BA
slipped down significantly.
BA’s loss was competitor’s gain.
Two of the BAA directors were sacked immediately.
The crisis became a matter of national shame.
11. Steps taken by BA
BA officials offered an immediate apology & promised
that services will be back to normal soon.
Poor compensation to the affected passengers.
Lack of communication & transparency in operation.
BA & BAA played the blame game.
Transferred the entire load from terminal-5 to T-1 & T-
4.
Advertisement on social media & search engines.
Later on CEO Mr. Willie Walsh took the responsibility
of the entire incident.
12. Recommendations & lesson learnt
Don’t let it happen at the first place.
Don’t overpromise & underperform.
Take responsibility & take noticeable actions.
Adopt proper service recovery system (proper
compensation policy).
Keep internal customers happy.
